Organizations are increasingly looking to reader support as a primary revenue stream. In an analysis of almost 2000 domains in our network, 29% of those sites had some kind of paywall. While paywalls are one option for reader revenue, they aren’t the only one.
Danya Henninger, Editor at Billy Penn, explains their membership philosophy of going directly to readers for support. “The message for our membership program is that we care about you, each individual person who reads our stories. We care what you think about us and about how we report,” Danya said. “And we want your feedback.”
Danya talks with us about the channels where Billy Penn connects with readers, the role newsletters play in building loyalty, and how the “returning visitors” metric connects to membership potential. Sachin and Andrew discuss the efficacy of paywalls, their perspectives on reader revenue as company founders, and how it ultimately comes down to forging relationships. Plus, they go +1/-1 on reader support methods and membership perks.
- 3 questions to ask your data when evaluating a paywall, Clare Carr, Parse.ly
- Media outlets refocusing on their biggest concern: monetization, Marissa Rasmussen, Parse.ly
- It’s time for a paywall revolution, Melody Kramer, Poynter
Megan: Let’s talk about reader revenue. I think it’s fair to say, the last couple of years have been unique, especially when it comes to the news and the media. Earlier this year at Parse.ly we asked over 200 media professionals what their top priorities were for 2018. It turns out, reader support models and subscriptions were the biggest priority for 33% of people—for one-third of those people. Why do you think that was the case and why do you think it was the case this year in particular?
Sachin: I’ll quote Wu Tang Clan: “Cash rules everything around me.” I think it’s all about the money. CPMs are going lower, programmatic advertising isn’t living up to what it’s hoped to be, so they’re looking for additional revenue streams.
There are success stories here. You have the Washington Post and New York Times that have been really great at driving subscriptions. You have other companies, like NPR, that have done really great jobs on reader supported models. If they see something that works—and what the current situation is right now is that the revenue streams aren’t working—they’ve got to move to where it’s a positive.
Megan: (1:10) Reader support is one of the main revenue streams for Billy Penn. Thinking of success stories, they’re a great example. They’re an independent media organization out in Philadelphia, and they’re one of the sites within Spirited Media. They have sites, I think, in Denver and another place, too. They’re all devoted to finding new business models for local journalism, which means that reader revenue is a really big deal.
This episode we are going to talk to Billy Penn’s Editor, Danya Henninger, about their philosophy on reader revenue. That includes how newsletters play a really big part in their membership strategy.
Sachin: Not tote bags?
Megan: Not tote bags.
Welcome to the Center of Attention, the podcast exploring how digital behavior relates to the attention economy at large. I’m Megan Radogna, the show’s producer, and I’m here with Parsley’s co-founders and the show’s co-hosts, Sachin Kamdar, and Andrew Montalenti. Hi Sachin.
Megan: Yo. Hi, Andrew.
Andrew: Hey there.
Megan: (2:12) Hi. Alright, we are all here. We’ve got our happy hour drinks. It’s time to talk more about reader revenue.
When I think of reader revenue and media, paywalls are usually top of mind. Sachin, the organizations you mentioned, some of them are using paywalls as part of their strategy. Wall Street Journal comes to mind, Financial Times—they’ve had paywalls for a really long time. A lot of other sites this year, like Wired, Adweek, and Business Insider, have all followed suit.
Another question for you, what fraction of sites in our network at Parsley do you think have implemented paywalls?
Sachin: That is a good question. If I had to take a guess, about that, I’m going to say 15%.
Andrew: I’ll say a little bit lower, maybe 10%.
Megan: Kelsey, who is one of our colleagues, ran an analysis on 1,870 domains in our network. Of those sites, 29% of them had some kind of paywall.
Sachin: Whoa. That’s way higher than I thought.
Andrew: Yeah. Me too.
Megan: Yeah, it’s substantial. It actually kind of calls back to the survey number, just roughly a third of people thinking about some kind of reader revenue. There’s been debate, as there usually is, about the potential for paywalls to quote “save journalism.” What’s your opinion on this? Do you think paywalls have the same potential for all sites?
Sachin: (3:36) No, I don’t think that’s the case. I think that if every single publisher out there implemented a paywall model, they wouldn’t all be successful. There’s only a certain amount of time people are going to spend on content sites and there’s only a subset of the sites of they visit that they’re actually going to fork over their dollars for. I don’t think every single publisher or digital media company can do that. I do think it frames the way these companies need to think about their content and audience differently, which I think is healthy.
They really have to think hard about what’s valuable for the reader, the viewer, the user, however they term the person that’s visiting their site. I think that’s a healthy thing to consider, in a world where there are a lot of poor experiences on content sites.
Andrew: (4:28) My perspective here is that, over time, every site that operates well eventually has some sort of monetized reader product. I don’t think you’ll see a hundred percent of sites implementing that. To operate well, I think you actually have to make your content free to grow. What I mean by that is, if you just launched a new publisher the other day, you don’t want to launch up front with restrictions with how people find and discover your content. You want to launch up front trying to get as many users as you can, getting as many readers as you can, and getting the awareness of your brand out there.
Once you have a little bit of a loyal audience, then you can start to think about, at what scale can we carve out a percent, 2%, 5%, of our audience and get them to actually pay us for something special that we can provide them. I think every publisher is going to have that conversation of, is there a 1% to 5% of our audience who’d be willing to pay us for something more than a tote bag; maybe for some custom content, maybe for some extended access, maybe for deeper coverage of different topic areas that maybe are more relevant to their niche or day to day lives, or their business, or whatever it might be. I think that’s going to be a conversation you see happening all over the place.
I do think it will be one of the things that sustains journalism, at well run organizations, but is it the end all be all, is it the thing that saves journalism? Are we all going to switch over to the Spotify model, where we’re all paying a little bit of money, and it’s getting parceled out to sustain creatives and journalist? I don’t think is going to happen, that’s the part I’d say is unlikely.
Sachin: (6:18) Parceled, I like it. There are a lot of different ways to convert, it’s not just a subscription model that has to work. There is the reader funded model, there is things that they can pay for like, research or events, that a lot of publishers are engaged with. There’s like e-commerce tie ins. There’s a lot of ways to get people to fork some cash, if you really want to push them down a funnel. It doesn’t just have to be about paywalls.
Megan: (6:46) That’s what I really want to get into, because what I think is fascinating about Billy Penn is that they elected not to ask people to pay for subscription to get past a paywall. They really just go directly to people for support and it’s working. Here’s Danya on growing reader support at Billy Penn. She started off by describing the model itself.
Danya: (7:07) From the start, the philosophy behind Billy Penn was to be engaged with our readers, to not be talking down to people as if we’re in some ivory tower and we know things that you don’t. We want to be on the same level with our readers. It fit right in to launch a membership program, which started at the beginning of this year. That’s one of our main revenue streams—or, we’re working on making it one of our main revenue streams. Instead of forcing people to buy a subscription or pay to get past a paywall, we simply ask people to give us money and they do.
Megan: (7:45) As editor, how have you worked with your team to launch your membership program and start to shape it?
Danya: (7:52) It’s been a very involved process. Everybody on the team—we have a very small team—but everybody on the team is involved in the process. The message for our membership program is that we care about you, each individual person who reads our stories. We care what you think about us and about how we report. And we want your feedback.
If we’re going to ask for your support, your financial support, then we’re going to care about what you say. We really want our readers’ feedback, we want to listen to them and make sure that’s the message we’re getting across.
Megan: (8:28) What are the channels that you’re using to reach those readers and to get feedback from them?
Danya: (8:34) Social media is probably where we are personally most active. We get feedback on Twitter all the time, through direct message. Sometimes on Instagram, we have conversations. Also Facebook, in the comments or on messages—we’re very responsive on Facebook. And then via email when a reader responds. People will often email us questions or replies back to our daily morning newsletter.
Megan: (9:01) When you’re look at analytics, when you’re looking data, is there a metric that you’re looking at that really helps you connect the reader behavior you’re seeing to your ultimate philosophy for membership?
Danya: (9:14) For sure, I mean it’s returning visitors. If people are coming back to visit our site multiple times, those are the people who are prime to be newsletter subscribers and members. We look at what content gets recurring visitors, what is bringing visitors back again and again. Those are the people we want to become our members.
Megan: (9:37) You ultimately see a connection between high engagement and return visits?
Danya: (9:44) Absolutely. As an editor, I am judged, my performance is judged on returning visitors, not necessarily on clicks or pages views, but a couple of the metrics that I’m judged on, how my performance is judged on, is how many visitors return and how long do they stay, engagement.
Megan: (10:01) Especially coming from newsletter, are you ever taking a look at how much time people are spending with articles, comparing that time spent based on the referral source? Whether they come from the newsletter or from social or from search?
Danya: (10:17) People who come from search spend the least amount of time on any given article. They were looking for an answer, or either they clicked through and didn’t find it, or they don’t know us necessarily. Then next it goes to social and definitely newsletter subscribers, the newsletter referrals. People who come from newsletter stay on our site the longest.
Danya: (10:39) We also have another metric that we follow, completed engagement on a camp member, what our product team calls it, that tells us whether they scroll to the end of the article, and that should be higher with newsletter subscribers also.
Megan: (10:51) Even if they’re coming in, and they’re reading one article from that newsletter, if they read it fully and then come back the next day, or when they’re back from their vacation to get back into the newsletters they missed. It does mean logically, it’s a really great sign—it means they’re committed.
Danya: (11:10) One thing I didn’t mention about the newsletter, the goal of our newsletters is not necessarily to get people to click through to our site. I mean that’s obvious because we link to many other places in our newsletter too. We have a pretty high open rate that hovers between 25 and 30%, which for a daily newsletter is really pretty high.
Megan: (11:32)That’s very high.
Danya: (11:33) It doesn’t change on the weekends, which is kind of interesting, cause I feel like a lot of people are in a different place when they open their email in the morning on the weekends, but it stays at that level seven days week.
Megan: (11:43) Wow. That’s interesting, too. You’re kind of layering on email specific metrics as well as overall site metrics and your content/article post-level metrics.
Danya: (11:57) Yeah, it’s all about metrics.
Megan: (12:01) Looking at that funnel and creating newsletters, have you found that newsletter subscribers have different behavior and different reading behavior, perhaps even interests than non-subscribers.
Danya: (12:13) Definitely, that where some of the analytics comes in, it’s interesting. When I look at Parse.ly on a daily basis, I can see the direct traffic and that is what’s coming mostly from. If it’s in the morning, the spike of direct traffic is the newsletter subscribers opening our stories. Things that spike on those, in the direct traffic in the morning, are usually very different than articles that have been popular on either search or on social platforms.
Megan: (12:45) What’s an example of an article that, maybe even recently in a newsletter in the last couple of weeks, you noticed resonated with those readers and was maybe a standout compared to what you’re seeing on search or social?
Danya: (12:59) Just yesterday, there was National Cheeseburger day, which I consider a little bit silly. It’s a made up holiday, but we did a listicle that was Philly’s 10 best cheeseburgers for 10 dollars or less. We put it out on social and there’s so much else there on social about cheeseburger day and cheeseburger listicles and things like that. It did okay, didn’t do that great. In the newsletter it was the most clicked article of the month, probably.
Megan: (13:28) I like their priorities. I like that cheeseburgers came out on top.
Danya: (13:32) It’s interesting because sometimes it’s the opposite. Sometimes it’s the really nitty-gritty, deep dive investigative stories. Those also sometimes don’t click well on social because they’re complex and people don’t have the time when they’re scrolling through Twitter or Facebook to read a whole big story. Those stories also end up doing much better in the newsletter.
Megan: (13:53) When you get that kind of information back about what’s resonating with people in a given newsletter, does that ever inform your decision making of how to frame a newsletter, or what to include or just give you a better understanding of what your most loyal readers are interested in?
Danya: (14:13) The feedback from the newsletter, the analytics looking at what people in the newsletter like, definitely frames out thoughts about what kind of content to publish.
This morning we had a story that was like a really deep dive into some news that broke yesterday, so where a lot of other outlets did a piece really quickly, turned around a piece that basically powered the statements that were said at the press conference, we took some time. One of our reporters already had connections in that field and did a deep dive on that story.
I put that at the top of our newsletter this morning and then at the bottom of our newsletter, because I had an inkling that that would be the kind of story that our subscribers would like. I mentioned that story and said if you want us to do more like that, consider becoming a member today.
Megan: (14:56) That’s really cool. It’s all dynamic, depending on day to day and what’s happening, and you’re just as engaged with the community as they are with you it seems.
Danya: (15:05) I try; I don’t know how else you would do it.
Megan: (15:10) I’m wondering, in the same way that either reader feedback or feedback from data gives you information about the content itself, does it ever help you think about design—the design of the newsletter?
Danya: (15:27) Oh gosh, yes. The design of the newsletter is a big issue that takes up lots of my brainpower all the time. One big thing I’ve been going back and forth on is whether to start our newsletter with a personal note. That’s the trend these days it seems. It’s considered to be like a positive thing if you’re trying to get new members, because it immediately starts with a personal connection, which is thought to be what will get people to sign up as members, if they feel personally connected to you.
Like our sister websites, in Denver, Denverite, and in Pittsburgh, The Incline—they both start their newsletters with a personal note and then get to the news. I have not done that yet. People read Billy Penn’s morning newsletter, as their recap of news for the day. A lot of people have told us this, that they depend on it.
At one point I asked, in our morning newsletter. I said, “Hey, how about if we do this note up here.” And got several replies, “Please don’t do that.” They just want the recap of the news. I’m going to have to figure it out.
The fact is that, Denver and The Incline are doing really well with their membership programs, especially in Denver, their whole thing is they’re delightful and everybody loves each other. Membership is great.
In Philly and our attitude really is a little more snarky. I understand, we don’t have that same kind of relationship necessarily, but maybe if I put the note in the newsletter, that’ll change. I don’t know.
Megan: (17:04) Is there another way that you found, or even just an anecdote about building personal relationships with readers, does that always happen online? Are there ever offline or in person ways to connect with this community of readers?
Danya: (17:22) It definitely does not only happen online. The second half of our revenue model is events and interacting with our community and our readers directly. From the start we’ve tried to host events where we interact with readers, and maybe provide more information to them with a panel discussion or just provide a fun night with some cool new beer or wine tastings, or provide networking opportunities where they can meet each other. And we’ve really ramped that up this year.
That’s an opportunity for people also to become members. At every event, we mention that we are partially member supported and we sometimes have little table talkers where people can go to a direct URL and donate on the spot. That has happened and what’s also happened is that people who have met us at events don’t necessarily become members right then and there, but they’ll become members within the week. We’ll know, because there’s a little place when you sign up to become a member, where you can send us a note and tell us why. Sometimes people are like, “Oh, I met so and so at the event last night.”
Megan: (18:30) As a local news site, I was wondering if you face any challenges for reader support that maybe a national organization doesn’t. But on the flip side, I’m wondering what advantages you have? This ability to host events and meet with people seems like one of them.
Danya: (18:48) Sure. Two sides of the coin. Obviously, if there’s a national audience, you have a much bigger potential membership. We do have some members and readers who are Philly expats who read Billy Penn to catch up on their home city which they no longer live in.
For the most part, I think it’s something like three-quarters of our membership is in this area. That’s the issue; we don’t have the breadth of a national outlet.
On the other side, that’s great, all our readers are in this area. We can go out and connect with them directly. We have the same cares. Talking about the weather is the most boring thing in the world, but it’s something you can relate to with people who are in your area. There are many things like that, weather’s just the easiest example.
Megan: (19:46) Yeah, that rings true to me. If we go into our office Slack first thing in the morning, the channel for New York is, how are the trains, how’s the weather, is it raining yet? We’re all in the same place; it’s the first way you connect.
Danya: (20:02) It’s amazing that these days, you find out, whether it’s raining by looking online.
Megan: (20:07) Yes, I know, going outside seems so hard sometimes.
Danya: (20:10) I do it, it’s true.
Megan: (20:13) I want to talk a little bit about how a reader support model compares to the broader picture of what happening right now, maybe in other newsrooms. It seems that subscriptions and paywalls, membership models have been something a lot of organizations have explored especially in the past year, maybe as a move away from advertising. I was wondering, have you seen any benefits from a reader support model that are maybe unique to it, compared to a display advertising model?
Danya: (20:49) Display advertising is the worst thing to happen to journalism. Outlets never charge enough for online display ads to support themselves. It was not a model that was working and things were tanking.
Beyond that, even if they had charged enough, the display ad model is bad for news. It’s very bad; it’s what has brought us to this culture of click bait and listicles. If the only thing that’s supporting your site financially is revenue from ads—the more clicks you get, the more money you can charge for ads—then you’re just going to put out content that gets more clicks. It’s as simple as that. Just a fact. That is not good for journalism, it’s just not. Things that get clicks are not usually things that are necessarily important or things that are effective, marginalized communities, or things that are totally new, that people aren’t already familiar with, they might not click.
Danya: (21:51) Depending on display ad revenue changes what kind of news you produce. The reversion back, I’m so thrilled the industry has realized that’s not the way to go.
Megan: (22:03) For anyone who’s maybe inspired by the discussion we just had is considering a reader support model for their site or is maybe in the midst of building it, or are currently has a membership program, what’s a piece of advice you’d share with them? What’s something that really helped you to keep in mind as you were building out engagement with your community?
Danya: (22:30) It’s not about the tote bag. When we were first designing the membership program, we picked three tiers and if you’re at this tier, you get this many perks, and if you’re at this tier, you get this many perks. As we started to get members and to get feedback, we realized that people were not joining because they wanted a laptop sticker or they wanted a discount at a couple of events. They were joining because they cared about our work, and they liked us, and they wanted to see us succeed.
Megan: (23:16) I want to get you guys’ perspective on what we talked about with Danya, from not just working with media, but also as company founders. I’m curious, what’s an element of Billy Penn’s reader revenue model that you found interesting as founders, from your own philosophy on revenue?
Sachin: (23:34) I think Danya made it clear that they tried to experiment with a few different ways to get readers to pay for stuff, but ultimately they found that it was about the relationship. They had to create a strong relationship with the reader; whether that was through events, whether that was through their newsletters, like getting them the information they wanted as fast as possible.
It was that relationship that fueled their interest in supporting the company they found valuable, as a founder that really resonates with me. That is one of the core things that you need to do when you’re just getting started is, really understand your customer, what their paying points are, and then build that relationship, so that we create this community, we create this relationship, that is monetizable in and of itself.
Andrew: (24:22) Yeah. I mean for me, it actually brings me back to the early days of starting Parse.ly, from the standpoint that roughly a decade ago, people were really down, actually, on subscription software companies, and they were really up on freemium as the primary model. It was all like, “Hey, let’s get as many free users as possible and then maybe we’ll just charge a dollar or 2 for a little utility software service.”
What happened over the course of the next few years is that people realized that, people are willing to pay for value. If they get value out of a software product, they will pay for it. That was a lesson that Sachin and I took that really deeply to heart. It resulted in us really, almost geeking out on the different ways that people value software products, and the different ways people are willing to pay for those products, if they solve a problem for them.
I think publishers right now are waking up to the potential there. If you listen to what was just discussed, you hear that, hey, they are not even really trading any value. They are just saying, “Do you value our content? If so, pay us.” And yet that’s causing people to fork over dollars and cents to them. That’s pretty cool; that’s an indication that people on the internet are actually pretty aware of where they’re spending their time, and how much money they can spend on a service, or on a content provider, in order to show the amount of value they’re getting out of it. I think that’s just great.
Sachin: (25:57) Alright, let’s continue our conversation about reader revenue and get into the plus ones and minus ones for the week. There are all different strategies that you can use to get people to subscribe to your content. Let’s just run through a list, Andrew, and we can plus one or minus one a few of these and see kind of where we fall. Let’s start with the first one. Ungating content you want to read. Plus one, minus one.
Andrew: (26:20) Yeah, I’d say that one’s pretty effective for me, so I would give it a plus one.
Sachin: (26:23) Plus one.
Sachin: (26:24) Extra content that is only for subscribers.
Andrew: (26:27) You know, I’ll actually minus one, this one. I thought that this one would be effective for me. I think actually, it might have caused me to subscribe me to subscribe to The New York Times at a certain point, but I tend to find that the subscriber only content is something where I kind of want it, but then I don’t end up using it as much as I thought I would. So I will give it a minus one.
Sachin: (26:48) What about these bundles, where they’re bundling print plus digital or trying to sell you the Sunday New York Times. Does that get it for you, Andrew?
Andrew: (26:59) Yeah, that one is fascinating, there’s a couple of interesting things. One is that I’ve noticed that some publishers have started to actually use the print edition to sort of price anchor the digital edition. Sometimes, the price anchor’s even confusing, in the sense that they make the print plus digital edition the same price as the print edition. Basically telling people we want to use our digital subscription product. Obviously, has a very different cost basis.
The thing with me is that, I used to be very pro print plus digital, but then I got into a sort of, I guess minimalism, or essentialism streak. I really have been trying to pare down the number of book, magazines, and newspapers I have in my house and consolidate down to just kindle, plus IPad, plus kind of laid back reading on digital and so on.
I’m minus one right now, even though actually, this has worked on me many times in the last few years.
Sachin: (28:02) I am also minus one, save the trees, go paperless, no to print.
Alright, I know swag works, those tote bags for NPR, Gimlet Media has t-shirts; does swag get you to subscribe?
Andrew: (28:16) It totally does actually. In the Wired subscription, I actually really did want the Wired Yubikey, that they were selling. I was going to buy a Yubikey anyway and for listeners who don’t—
Sachin: (28:26) What is a YubiKey?
Andrew: (28:28) For listeners who don’t know, a YubiKey is basically a device you attach to your key chain, which you can connect to a computer. Basically, is like a USB drive. You connect it to your computer and what it does, is it has a secret key on it. You can use it as a factor of authentication to secure backups and applications and things. The way to think of it, is it is a digital key and you put it on your key chain and someone needs to have your password and that key in order to access certain systems.
The company that sells these is called YubiKey and Wired did a very clever swag offering for their premium subscription, which is that they would bundle a YubiKey—which normally costs 30 dollars or something—they would bundle that with a Wired logo on it as part of the subscription package. That actually worked on me.
Sachin: (29:21) I’m minus one on swag. I don’t think I’ve ever subscribed to anything based off of swag. Can’t support that one. What about other bundles—Spotify and The New York Times do a bundle, obviously there’s a bundle between Amazon Prime and Washington Post. What about bundling of different goods, not just the content itself?
Andrew: (29:47) I tend to be anti-bundles in general, but I’ll give this a plus one, ’cause I think it’s an effective strategy, even on me. The classic example here, it’s not a news and content example, but Amazon really got me with their channels bundle. I went all in on Prime HBO, Showtime, all via Amazon, kind of bundled together. I think it maybe just comes from me wanting to simplify my life and not have all these separate subscriptions, that’s probably what it comes down to.
Sachin: (30:20) I guess I’m plus one on this. It has worked for me. Prime, Washington Post, that has worked for me. They’re a little sneaky about that. I think they auto bundle it and then you have to unsubscribe, if you don’t want it. I still am a subscriber to Washington Post. It has worked on me.
Last one here, have you ever wanted to subscribe to something to use that as bragging right? Like, “Hey, I’m a subscriber of NPR,” or “I’m a subscriber of The New York Times.”
Andrew: (30:48) I think pretty much everyone who has subscribed to the Economist at some point did it for that reason and I’m included in that group. Yeah, totally, you just want to tell other people that your smart and put the magazine down on the desk and tell everyone that.
Sachin: (31:02) You know, my wife is a subscriber of the Economist, she really loves reading it, the print magazine. I’ve never heard her brag about that.
Andrew: (31:13) We just run in different circles.
Sachin: (31:15) I guess so. I guess so.
Megan: (31:17) That’s it for this episode. Thanks for listening and thanks to Danya Henninger for joining us as a guest. Subscribe to The Center of Attention on Apple Podcasts, Google Podcasts, Stitcher, or SoundCloud. If you enjoyed the show, please tell a colleague or tell a friend. You can also follow our hosts on Twitter—Andrew is @Amontalenti and Sachin is @SachinKamdar. Thanks again for listening and remember: forging connections with readers matters. Until next time.